Ted Grant

Only one solution—Budget
demonstrates the impossibility of capitalist “planning”

The
budget introduced by Callaghan, has nothing to do with the principles
proclaimed by the Labour Party, and all the present leaders of the
Labour Party in the cabinet, for generations. It is a futile attempt
to operate capitalist economics in a “new form,” so new that it
harks back to the discredited 19th
century capitalist economists Marshall and Pigou. This is supposed to
be modern socialism! Instead of introducing real socialist measures,
such as taking over the private banks, insurance companies and
monopolies that control over two-thirds of the economy they are
attempting to operate within the framework of capitalism, with
disastrous results for the working-class and even for the economy.

According
to the capitalist economists the new tax measures will result in
increasing prices for the working people by at least 1 percent. Even
the capitalist papers themselves, point out that there is nothing
left of the so-called “national plan,” which was to make Britain
productive and prosperous. Instead, we have the grim realities of
capitalist economics, and lop-sided capitalist economics at that, in
a desperate attempt to solve the economic problems. Taxes are to be
made for all employees in the service industries, in an endeavour to
create a pool of unemployed and at the same time change the
relationship between those employed in manufacturing industries and
in the service industries.

It
is a law of capitalist economics that money will flow to those
industries making the highest profits, in Germany the relationship
between manufacturing and service industries is 10 percent more
favourable to the productive economy than in Britain. Consequently
this is a clumsy attempt to try and alter the relationship at the
expense of the working people.

In
a disguised way this is an even worse budget than that of Selwyn
Lloyd and can have as disastrous consequences.

There
are all sorts of anomalies in the taxes which space will not allow to
give. But one example stands out: the candy floss industry qualifies
for the subsidy, while certain export industries have to pay the tax.

The
payroll tax is £375 million per year on the service industries while
the manufacturing industries get a subsidy of £135 million.
Supposedly for the purpose of increasing productivity these new taxes
add new burdens of bureaucracy and tax collection on the economy in a
complicated way. Housing will cost more, the building societies are
threatening to raise the rates to
7.125 percent.

This Budget is
intended to try and weaken the struggle to improve the standard of
living while increasing the profits of many of the biggest of the
multi-millionaire concerns. Wilson and Callaghan are basing their
budget on the interests of the giant manufacturers and combines and
not on the interests of the working class. The balance of payments
will still remain as a menacing problem to the economy of the
country.

The
strike of the seamen for a decent living wage, which will undoubtedly
have the support of all sections of the organised working class,
takes place at a time when the budget introduced by leaders of the
labour movement act in the direct interests of big business.

The
following table of the giant monopoly concerns and the presents given
them contrasts shamefully with the attitude of Wilson and the
government to the demands of the seamen:

In
pocket

*Benefit
(£m.)

ICI

2.25

BMC

1.8

GKN

1.7

United
Steel

0.75

Out
of pocket

*Cost
(£m.)

Co-operative
movement

10.0

Rank
organisation

2.2

Barclays
Bank

1.8

Marks
and Spencer (distributive side)

0,78

*
Before tax

(Financial Times, 4th May 1966)

And
the worst feature of these shameful measures prove the impossibility
of “planning” under capitalism. Instead of resulting in the
introduction of new machinery, in which the huge monopolies received
a huge subsidy last year, as even the Economist
calculates this so-called plan is an actual encouragement to the
manufacturers to hoard labour.

The
manufacturers will pay out 25s per man and get back 32s 6d.
So it becomes nearly £20 a year cheaper to hoard workers for the
manufacturers than to introduce new machinery! And Wilson, Brown,
Callaghan and all the other leaders of the Labour Party have the
ironical nerve to pretend to stand for “practical politics”
instead of the utopian ideas of “socialism.” What practical men!
Even the capitalist Economist
of May 7th
comments:

“The
Economist has often
argued the case for encouraging labour-saving in this country, by
imposing a large payroll tax, the investment grants should certainly
be made non-discriminatory, so as not to hit the service industries,
who are at the same time kept deprived of any investment incentives
so that they cannot replace with machines the surplus labour that
they should now be shedding; plus an actual payroll subsidy amounting
to some £135 million a year, to manufacturing firms, who are thus
encouraged to use their labour even more wastefully, at the same time
as they are the only people who are given an incentive to put in new
machines to replace it.”

Of
the 1.3 million new British employees, 142,000 only are in
manufacturing. The attempt is to try and drive 1 million from the
service industries and construction as explained above.

To
“plan” an economy in this way is utter madness. Instead of
marginal contradictory measures—bureaucratic measures—which in
any case are nullified by the effects of the world market, what is
needed is an assessment of the entire economy together with a state
monopoly of foreign trade.

As
things stand now the minimum deficit in foreign trade is expected to
be £150 million.

Just
one point in passing is the dirty blow received by the co-operatives
where the dividend of many co-ops will be cancelled out by the taxes.
This is not to offend the representatives of big business.

The
reduction in popular consumption is now £240 million. The tax rates
are 25s per man employed, 12s 6d per boy under 18 and 8s per girl
under 18. The rebates to manufacturing industry are men 32s 6d, women
16s 3d, boys under 18, 16s 3d, girls under 18 10s 6d.

Yet
if the wealth of Britain were organised, under a real plan involving
the tens of millions of trade unionists, house-wives, small business
people and so on, the problems of production with the co-operation of
scientists and others would have been solved for the benefit of the
people of Britain.

As
it is, Britain is getting the worst of two problems. The working
class movement, both Labour and trade union, is strong enough to take
over the economy if a lead were given by the Parliamentary leaders
and on the other hand the leaders’ attempts to operate on the
principles of the capitalist market meet the inevitable resistance of
the organised labour movement. This can only lead to the further
decline of Britain as the “sick man of Europe.” The only means of
salvation lies in the operation of socialist principles nationally
and internationally.